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Report: Development bank’s Cambodia rail project left thousands in poverty

Today in Manila, Philippines, the internal watchdog of the Asian Development Bank (ADB) – the Complaints Review Panel (CRP) – released its investigation report of the Cambodian Railway Rehabilitation Project. In what some experts claim to be the “most damning“ probe into the ADB’s practices to date, the panel noted the bank must undergo a “mind shift“ in the way it treats people impacted by its projects.

The accountability body found that the regional bank failed to comply with its policies and procedures regarding the resettlement of over 4,000 families displaced by a $143 million project it funded to renovate Cambodia’s dilapidated railways.

The CRP‘s report came on the back of a 17-month investigation, following a complaint filed on behalf of affected families by Inclusive Development International (IDI) and Equitable Cambodia. ADB’s Board of Directors approved the recommendations and findings of the panel on January 31.

The panel found that families affected by the railway rehabilitation project “suffered loss of property, livelihoods, and incomes, and as a result have borne a disproportionate cost and burden of development efforts funded by ADB.” It went on to state that the policy breaches left a very large number of affected households worse off and impoverished.

Im Sam Euen‘s is one of the thousands of families displaced by the investment. The 58-year-old mother of four was forced to move to the Trapaing Anchanh relocation site two years ago. Her 10-person household received $800 dollars compensation and was shifted 28 kilometres away from Phnom Penh’s Russey Kao district, where she had lived since 1999.

“There was not much I could do with this money. Most of it was spent on the moving expenses and on transport for my children, on whom I rely for income, so they could get to work,“ she said.

It wasn’t long before her children moved closer to their workplace. With them disappeared the financial net and stability for the remaining family members, including grandchildren.

Struggling to make ends meet and with no employment opportunities in sight, Euen quickly fell prey to a local loan shark. One year after borrowing $1,500 from a private moneylender, she had to pay back $3,000. Because she didn’t have the money, Euen had to ask the same man to take out a $4,000 loan for her from a microfinance company, so she could pay him off. The result? The woman will soon become a renter in her own home.

She now hopes the ADB will help her out. And help it should, according to the CRP and to ADB’s statement published in response to the findings of the investigation. The panel made a number of recommendations for remedies, including establishing a $3-4 million “compensation deficit payment scheme“ and a debt workout scheme for highly indebted households, among others.

In an unprecedented move, the ADB released a statement last week admitting to its malfeasance. The bank recognised that displaced households were insufficiently compensated, and that it failed to fully comply with its own policies relating to consultation and communication with affected families. The funder also conceded to not having an appropriate grievance process, to delays in helping the evictees with income-restoration activities, and to deficiencies with some relocation sites.

It agreed that the compensation deficit, together with other deficiencies, should be rectified as soon as possible. The bank also emphasised its commitment to “immediately engaging with the Government of Cambodia and other stakeholders to prepare an achievable, time-bound action plan” that will be put together within 60 days.

Asked about details and possible costs of the implementation of the new action plan, a Communication Specialist at ADB, Karen Palmer, told Asian Correspondent the bank would be able to provide more information once it “had conducted consultations with the government and other parties“.

Even though human rights watchdogs have been raising concerns over adverse impacts of the project since 2010, the ADB never before assumed responsibility for the displaced people. Instead, it pointed the finger at the authorities, which are officially in charge of the resettlement process. Nhean Leang, the Undersecretary of State at the Ministry of Finance, who is also a member of the Inter-ministerial Resettlement Committee, could not be reached for comment.

In 2012, giving into pressure from rights groups, the ADB appointed an independent resettlement expert Professor Michael Cernea to conduct an examination of the situation. His report heavily criticised the resettlement process and concluded that the relocated people had been left worse off. Cautious of the waves these findings would create, the ADB never released Cernea’s study in its entirety. Only the report’s recommendations were made public, after thebank’s president decided “the harm that would result from the disclosure of the entire Report would be substantial, immediate, and likely irreparable, and outweighs the benefits of disclosure.”

The sudden shift in ADB‘s stance was welcomed by rights watchdogs monitoring the railway‘s rehabilitation. Natalie Bugalski, Legal Director at IDI, said she was relieved to see the bank’s Board insist that the project be brought into compliance. But as she pointed out “the devil is in the detail“ and the ADB must ensure that “displaced families are fully compensated for all their losses and rehabilitated to their previous living conditions or better.”